T Network Services Business Models

Transcription

1 T Network Services Business Models Business Model Design Antero Juntunen Doctoral Student Telecommunications Software

2 On today s lecture Introduction Services Innovations Business models STOF business model framework S, T, O, and F domains CDIs CSFs STOF Method 2

3 Introduction 3

4 Characteristics of services Intangibility or non-material Inseparability Heterogeneity Perishability 4

5 Characteristics of innovation New or improved product, service, or process from a market point of view, which contains new technological solutions and has been commercially successfully introduced to the market. Process innovation Service innovation Product innovation Radical, disruptive, sustained, incremental, architectural, service and process innovations. The innovator gets competitive advantage through timing advance and IPR protection by patents short monopoly. Monopoly will loosen through trade of patents and licenses or knowledge spillovers when competitors copy the technology and proprietary technology gets common to all players in the industry. Proprietary technologies Generic technologies Science base R&D investment 5

6 Innovation diffusion Number of Users Network effects Business model renewal Economies of scale Managing a value network Openness vs. control Critical mass Market uncertainty Two-sided networks Early adopters Business models Time Switching costs Multihoming 6

7 Why business model? Unexpected success stories Market pull GSM voice & SMS, fax, I- mode, , Facebook, Google, Amazon, Apple AppStore, YouTube, Twitter, PayPal, Skype Business model and many failures Technology push videophone, X.400, IN, WAP, PoC, mobile TV, VoD, ERMES, UMTS 7

8 Business model Describes how to extract value from a mobile service innovation It converts new technology to economic value (utility for customers) Plan by which a business intends to generate revenue and profits taken into account the dynamics of related value chain 8

9 Business model research Use of the business model concept exploded with the advent of the Internet from 1995 Scholars do not agree on what a business model is Obstructs cumulative research progress Business model literature developed in silos Business models for e-business Strategic issues Innovation and technology management 9 Source: Zott et al., 2010

10 Business model research Emerging common ground among business models BM emerging as a new unit of analysis BM emphasize a system-level, holistic approach in explaining how firms do business Organizational activities important in BMs BMs try to explain how value is created and captured STOF viewed through this analysis Definition based on components (dimensions S, T, O, F) Links between different components Technology in a more prominent role 10 Source: Zott et al., 2010

11 Business model components Rappa (2001) Sustainability Revenue stream Cost structure Value chain positioning Chesbrough & Rosenbloom (2002) Value proposition Market segment Value chain Cost structure Value network Competitive strategy 11

12 Business Model Canvas 12

13 STOF Business Model Framework 13

14 STOF business model framework Practical tool derived from academic research - checklist of relevant factors to consider including their interrelationships in a complex innovation process Presents a holistic view of the business model design of an emerging service idea Can help in identifying the key weaknesses which could cause a service to fail as well as the strengths of a service Identifying these issues in an early phase makes it easier and cheaper to react to any problems and to approach the right market segments by right timing, differentiation and pricing Usage requires wide techno-economic skills - typically done by a group of experts working in different fields 14

15 STOF business model framework 15 Source: Bouwman et al., 2008

16 Service design 16 Source: Bouwman et al., 2008

17 Technology design 17 Source: Bouwman et al., 2008

18 Organization design 18 Source: Bouwman et al., 2008

19 Finance design 19 Source: Bouwman et al., 2008

20 Balancing of different goals NETWORK VALUE Strategic interests of partners CUSTOMER VALUE Design requirements usefulness 20 Source: Bouwman et al., 2008

21 CDIs: Service domain Critical Design issue Description Balancing requirements Targeting Creating value Branding Trust Customer retention How to define the target group of a mobile service? How to create value for end users? How to promote/ brand the service? How to enhance end users trust in the service? How to stimulate recurrent usage of the service Generic vs. Niche service B2C vs. B2B service Technological possibilities vs. user needs and wishes Operator vs. content brand Security vs. ease of use Privacy vs. added value Customer lock-in vs. customer annoyance 21 Source: Bouwman et al., 2008

22 CDIs: Technology domain Critical Design issue Description Balancing requirements Security Quality of Service System integration Accessibility Management of user profiles How to arrange secure access and communication? How to provide for the desired level of quality? How to integrate new services with existing systems? How to realize technical accessibility to the service for the target group? How to manage and maintain user profiles? Ease of use vs. abuse and privacy. Quality vs. costs Flexibility vs. costs Open vs. closed system User involvement vs. automatic generation 22 Source: Bouwman et al., 2008

23 CDIs and CSFs relating to customer value 23 Source: Bouwman et al., 2008

24 CDIs: Organization domain Critical Design issue Partner selection Network openness Network governance Network complexity Description Who is offering access to critical resources and capabilities in order to offer service? Degree to which new partners can join the network, and are allowed to offer services Dominant partners set and monitor rules over partnership, support partners. Customer ownership and control is key asset Degree of complexity of network, both organizational and technical Balancing requirements Limited number of partners versus quality of service and strategic interest Openness and customer reach versus control and exclusiveness Entry, compliance and exit conditions: individual versus network interest Need to reduce complexity versus need of access to critical resources & capabilities 24 Source: Bouwman et al., 2008

25 CDIs: Finance domain Critical Design issue Description Balancing requirements Pricing Price level Pricing seems to be aligned with maximizing profits versus creating market share Investments Division and valuation of costs and revenues between network actors Capital investment and risk assessment Assessment of valuation is based on access to resources, direct revenue and strategic benefits. Operational financial interest (ROI) versus intangible benefits (Options) Costs-benefits valuation on level of network versus cost benefits for individual partners 25 Source: Bouwman et al., 2008

26 CDIs and CSFs relating to network value 26 Source: Bouwman et al., 2008

27 STOF process phasing 27 Source: Bouwman et al., 2008

28 STOF process over time Phases R&D Roll out Market Market Regulation Market Regulation Market Regulation T S O F T S O F T S O F Technology Technology Technology 28 Source: Bouwman et al., 2008

29 Research methods for STOF analysis Desk research Focus groups Interviews Workshops Market research User trials Investment assessment Design session Action research 29 Source: Bouwman et al., 2008

30 Business model literature Required reading in the exam Course book (Mobile Service Innovation and Business Models) Part I in full Part II not required Voluntary reading: Paper by Zott, Amit & Massa: The Business Model: Recent Developments and Future Research Available at 30